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SmithStreetSolutions, a leading consulting and advisory firm based in Shanghai and New York, today announced the publication of its whitepaper: Initiative in Crisis: The Effects of the US and China Economic Stimulus Packages on Global Recovery. The study examines the US and China’s responses to the financial crisis, including:

A comparison of 10 different stimulus spending categories shows that the largest portion of the US stimulus (27.1%) is going toward tax relief, while the China stimulus is weighted toward infrastructure development (37.5%). The US is spending 16.0% of the stimulus on education and training, whereas China is only spending 1.3%; however, a significant portion of the China stimulus is targeted at rural development and post quake reconstruction (34.3%).

China and the US agree on the importance of Technology and Sustainable Development with both countries allocating significant portions toward promoting technology sectors, representing 14.6% and 16.3% of their respective packages.

Both stimulus plans are predicted to have great impact on the global economic recovery by supporting international trade – calculations estimate the US stimulus will drive $274.9 billion in imports, and China’s stimulus will drive $298.0 billion in imports.

Funds have been allocated, but the majority of the stimulus dollars have not yet been spent in either country, so the impact must be predicted by other signs such as consumer confidence, which has increased to 69.4 in the US for October, an improvement from the low of 55.3 in November 2008. In China the IMF maintains a positive outlook, projecting China’s GDP will grow at 8.5% in 2009.

“For the United States and most of the world, the financial crisis has overwhelmingly been a disaster, and has required emergency measures by governments around the world to prevent economic collapse. For China, however, the crisis has been more akin to an opportunity,” said Steven Lee, Head of Investment Research and Analytics at SmithStreetSolutions. “SmithStreet’s research has shown a clear delineation between the stimulus approaches of the US and China, with the US stimulus focused on emergency measures to shore up the financial system and promote domestic consumption, versus China’s stimulus which is driven by infrastructure development and long term growth of the economy.”

According to Lee, “The Chinese economy is upgrading from ‘Made in China’ to ‘Created in China’. SmithStreetSolutions’ thought leadership positions us at the forefront of this transition and is critical in allowing us to help our clients unlock the potential of this dynamic market.”

SmithStreetSolutions (smithstreetsolutions.com) is a leading Consulting and Advisory firm based in Shanghai and New York, with a Wuxi delivery center opening in 2010. By utilizing our experienced management and multicultural staff to bring global best practices to China and unlock China’s talent, we provide you with the knowledge and insights you need to make sound business decisions. Our services include Market Research, Investment Research and Analytics, and China Advisory. These offerings are backed by our Production Services, providing you with world class document production, translation, and data analytics solutions.

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